Item 5 - Fees and Compensation
A. Describe how you are compensated for your advisory services.
Provide your fee schedule. Disclose whether the fees are negotiable.
As previously stated in the Material Changes section of this Brochure, all of the Funds of the Adviser are in the late
stages of wind down and no longer accepting new capital or entering into new investments.
Stark Investments does not have a formal fee schedule. Rather, the advisory fees paid with respect to each Fund are
determined on a Fund-by-Fund basis, and each Fund may have multiple available fee structures. In addition,
different fee structures may have been negotiated with individual investors in a Fund.
The fees applicable to each Stark Fund (as defined below) are set forth in detail in the respective Fund’s offering
documents, which include any supplements or amendments thereto. A brief summary of those fees is provided
below. A “Stark Fund” is any private investment fund which is a U.S. Fund or an Offshore Fund and which is not
defined as a Deephaven Fund below.
With respect to the U.S. Funds that are Stark Funds (each a “U.S. Stark Fund”), if Stark Investments is paid a
management fee such fee is generally between 0.50% and 2.00% per annum of the net asset value (“NAV”) of each
investor’s capital account or each class of shares of the applicable U.S. Stark Fund, payable monthly or quarterly in
arrears. If Stark Investments is entitled to an incentive allocation, then such incentive allocation is generally up to
20% of the net annual profits of each U.S. Stark Fund. Net profits generally include both realized gains and losses
and unrealized appreciation and depreciation of securities held in a U.S. Stark Fund’s portfolio.
U.S. Stark Funds were typically organized as limited partnerships and generally any net loss in a fiscal year that is
allocated to any limited partner is carried forward so that no incentive allocation is charged to such limited partner
unless the losses have been recouped, subject to certain adjustments.
Each U.S. Stark Fund reserves the right to waive, or, if the change or modification is to the possible detriment of the
investor, impose different fees or otherwise modify the fee arrangements of an existing investor with the consent of
such investor. In addition, subject to certain constraints, each U.S. Stark Fund reserves the right to impose different
fees on future investors. If an investor redeems and the Stark Fund satisfies all, or a portion of the withdrawal
request in-kind, the investor will generally not (after the date of distribution) pay fees to Stark Investments with
respect to any holdings of such in-kind distribution, unless such securities are transferred or the investor otherwise
consents.
A portion of each U.S. Stark Fund may be invested in securities and other assets Stark Investments determines to be
illiquid and/or lacking a readily assessable market value, certain of which may be maintained in special situation
sub-accounts, or side pockets, in which case they are not subject to any incentive allocations until a gain is realized
or deemed realized. Side pocket investments generally are subject to the management fees described above and are
valued at their fair value, which may constitute cost for a reasonable period of time following their acquisition.
Subject to certain constraints, each U.S. Stark Fund reserves the right to impose different fees on future investors.
When an investor withdraws from a U.S. Stark Fund, the investor will generally pay any accrued and unpaid
management fees and be subject to an incentive allocation. In addition, a portion of the investor’s redemption
proceeds may be withheld or reserved until such time as necessary to pay for contingent or unforeseen liabilities
including, without limitation, certain audit fees, litigation costs and possible outcomes, management fees and
expenses on any side pocket investments that remain invested, as more fully discussed in the relevant offering
memorandums and any amendments or supplements thereto. As an investor withdraws from a U.S. Stark Fund, any
loss carry-forward associated with the withdrawn capital is generally eliminated and with certain limited exceptions,
following a full withdrawal of non-side pocket investor capital, no loss carry-forward is applicable to any
subsequent side pocket realizations.
With respect to the Offshore Funds which are Stark Funds (each an “Offshore Stark Fund,” collectively the
“Offshore Stark Funds”), if Stark Investments is paid a management fee such fee is generally between 0.50% and
2.00% per annum of the NAV of each class of shares of the Offshore Stark Funds (depending on the class of shares),
payable monthly or quarterly in arrears. If Stark Investments is entitled to an incentive allocation from an Offshore
Stark Fund, then such incentive allocation is generally up to 20% of the net realized and unrealized appreciation in
the NAV of the shares subject to the incentive allocation (the “Incentive Allocation Shares”). An incentive
allocation will only be paid with respect to the net realized and unrealized appreciation in the NAV of each Incentive
Allocation Share in excess of the prior high NAV used to determine the last incentive allocation made with respect
to such Incentive Allocation Share.
With respect to certain Offshore Stark Funds, Stark Investments is entitled to receive an incentive allocation only
after the Funds have achieved a specified return. The Board of Directors (or Stark Investments as its authorized
agent) for each Stark Offshore Fund reserves the right to waive, or, if the change or modification is to the possible
detriment of the investor, impose different fees or otherwise modify the fee arrangements of an existing investor
with the consent of such investor. In addition, subject to certain constraints, each Offshore Stark Fund reserves the
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